Many bills are paid in person at a biller or by mailing funds (e.g., in the form of a check) to the biller. Such methods can be inconvenient, time consuming, and expensive.
Another way to pay bills is to do it online. Paying bills online is convenient. In an online bill payment process, a consumer can go to an appropriate website and enter the biller name and payment amount, to pay the bill. When paying bills online, consumers can elect to pay using different models, such as the biller direct model or the consolidator model.
In the biller direct model, a consumer goes to the biller's website and sets up a payment using her payment method of choice. For example, in certain instances, the consumer may pay the biller with a credit card. Such transactions may resemble standard credit card purchases, with the biller acting as a merchant in an online transaction.
FIG. 5B can be used to illustrate the biller direct model. A consumer 930 may use a computer or other device to log onto a website of the biller 922 to pay a bill. After the consumer 930 is on the website, the consumer 930 may then choose to pay using a credit card 932. The consumer 930 may enter the credit card number or other identifying details of the credit card 932 into the website of the biller 922. The biller 922 can then generate an authorization request message, which can then be sent to the acquirer 925. (The acquirer 925 can be a bank that can reconcile account data and can also maintain one or more bank accounts for biller 922). After receiving the authorization request message, the acquirer 925 can then send the authorization request message (for the bill payment) to the payment processing system 926, which can then send it to the appropriate issuer 928. (The issuer 928 can be a bank that issues the credit card 932.) The issuer 928 can approve the authorization request message if the consumer 930 has sufficient credit, and an authorization response message can be sent back to the biller 922 via the payment processing system and the acquirer 925. At a later point in time, a normal clearing and settlement process can then take place.
The payments to the biller 922 can be one time or recurring payments. To encourage use of electronic payments, the biller 922 can use electronic billing, online customer service, and same day credit for payments to entice consumers.
Furthermore, since the acquirer has a relationship with the biller, the acquirer is responsible for ensuring that the biller fulfills its part of the transaction (e.g., ensuring that the biller provides the promised service or good to the consumer), and may offer refunds to the consumer in instances when the biller does not fulfill its part of the transaction.
Illustratively, the merchant can be a cable television provider. The consumer may pay for the cable service a month in advance, and the cable service to the consumer may be disrupted for two weeks of the month. The consumer may then dispute the bill payment of the cable television provider's bill using the consumer's payment card, since the consumer did not receive a full month's service. If the consumer paid with a payment card (such as one that is associated with an organization such as Visa™), the acquirer may be required to reimburse the consumer for the amount of money associated with the two weeks that the consumer did not receive service.
There are some problems with the biller direct model. For example, a consumer may have bills from multiple billers. For example, a consumer may have a power utility bill, a cable television bill, a water and sewage bill, a telephone bill, etc. The biller direct model requires a consumer to separately go to each biller's website to make a payment, which can be tedious and time consuming. Furthermore, many billers may not have a website set up for such payments, due to financial or technical limitations.
Another bill payment model is the consolidator model. The consolidator model is generally offered to consumers by their own financial institution and is an additional service that is provided with the financial institution's online banking service. Thus, in contrast to the biller model, which requires a consumer to log onto a separate website for each biller, the consolidator model may have the consumer log onto their own bank's website for all applicable bills. Consolidator model payments may also be referred to as online banking bill payments.
FIG. 5A shows an embodiment of a system according to the consolidator model. In the consolidator model, a consumer 800 opting to use this model can go through an initial set up process with their online bank 828. The consumer 800 can enter biller information (i.e., biller name, account number, mailing address, etc.) for each biller that they want to send payments to, on the appropriate website. The website may be with the online bank 828. Often, the online bank 828 may outsource many or all of the online banking bill payment functions to a third party consolidator, such as provider 824. Provider 824 can comprise a non-bank entity that coordinates among various banks and billers, and may provide websites and other technical functionality. In many instances when a consumer 800 logs onto a website of their online bank 828 to pay a bill, the consumer will be forwarded to a website of provider 824.
Once the consumer 800 has entered the payment information into the appropriate website, the provider 824 can coordinate the bill payment. The provider can transfer funds for the bill payment from the online bank 828 to a bank account maintained at the biller's bank 825. Funds can be transferred by means such as automated clearing house (ACH) payments, wire transfer, ePay, RPPS, etc. The provider 824 may also provide reconciliation data to the biller 822. This reconciliation data is required to let the biller 822 know that consumer 800 has made the bill payment. Often, payments may take from 2-5 business days to clear by this method, depending on connectivity between the provider 824 and the biller 822.
Most consolidator sites are “pay anyone” services, meaning that consumers can send payments to non-traditional billers (i.e., babysitter) or even to friends and family. Payments through the consolidator model are viewed as more convenient than the biller direct model because consumers can pay all bills through a single log-in session. However, payments made using the consolidator model can take longer to settle with the biller, depending on how the payment can be sent. The payments are often batched together with other payments, and may be sent to the biller daily or less frequently, again depending on biller connectivity and service level required. The additional time required for the biller reconciliation requires the consumer to schedule the payment to be made (and deduct the funds from their funding account) well in advance of the bill payment due date. The primary funding option for these payments is the consumer's checking account. A few online banking bill pay sites allow a savings account to be used as the funding source. In the consolidator model, payments are not made over a traditional card payment network (i.e., Visa, Mastercard, etc.) and thus cannot offer the benefits of such networks.
Better systems and methods to conduct bill payments are desirable. Embodiments of the invention address these and other problems, individually and collectively.